CSE supports the recommendations of the Parliamentary Standing Committee on the MMDR Bill 2011. Recommendations made public recently.

Applauds the Committee for deciding that the Bill’s profit sharing provision will remain, despite opposition from industry.

The Mines and Minerals (Development and Regulation) (MMDR) Bill 2011 tabled in Parliament on May 7, 2013

Parliamentary Standing Committee on Coal and Steel, headed by Kalyan Banerjee, presented its report to both the houses of Parliament

The report made public some days ago

CSE analyses the recommendations, agrees with most of them

Reiterates its support to the proposal to share benefits of mining with local people

New Delhi, May 24, 2013: Centre for Science and Environment (CSE) supports the recommendations of the Parliamentary Standing Committee on the Mines and Minerals (Development and Regulation) Bill 2011 (MMDR Bill) (to access a copy of the bill, see link given below). The Committee’s report is expected to be discussed in the forthcoming monsoon session of the Parliament.

In spite of stiff opposition from industry, the Committee -- headed by Kalyan Banerjee -- has decided that the profit sharing provision of the Bill will remain. The Committee has, however, suggested a change in the way the provision will apply to coal mines. While major minerals like iron ore, limestone, etc will have to share an amount equal to royalty, minor minerals will have to shell out a certain percentage of royalty which will be decided by the state government in consultation with the National Mineral Regulatory Authority (NMRA).

For coal, the Committee has suggested moving to this model of a certain percentage of royalty, rather than 26 per cent of profit as proposed in the Bill.

Commenting on this recommendation, Sunita Narain, director general of CSE, said: “The proposal to share benefits of mining with local people is an important step in building an inclusive growth model. Whether it is based on profit or royalty is immaterial, the principle is important.”

CSE has proposed that the royalty percentage for coal should be fixed at 100 per cent as in the case of major minerals (see analysis and opinions by CSE in the link given below).

According to some stakeholders, the mining industry in India is already heavily taxed and the MMDR provisions will push this burden up to 65 per cent. The ministry of mines has informed the Committee that the NMRA will look into the tax burden. CSE had released its report on profit sharing last year – titled Sharing the Wealth of Minerals (see link below) – which clearly shows that the Indian mining sector enjoys huge profits. The CSE analysis indicates that sharing these profits will not make any material difference to the profitability of the companies.

The Bill lays down the composition of the District Mineral Foundation (DMF) which will receive the profit sharing fund and will put it to use. The Committee feels there is a need to consider increasing the representation of the local community in the council of DMF – something which CSE has always called for.

“We feel the composition of the DMF as given in the Bill is skewed towards government and industry, which will defy the purpose of this exercise. The Committee’s recommendation is a welcome step,” says Chandra Bhushan, deputy director general, CSE.

The Bill also makes provision for a mining company to allot at least one non-transferable share to each person of the family affected by mining-related operations of the company. Acting on a proposal from the ministry of panchayati raj, the Committee has suggested that the share be made 'inheritable'.

The Committee has also suggested that the number of shares allotted to each person be linked with the quantum of land put to use for mining operations. It recognises that non-transferable shares do not have any economic value and hence the ban on transferring the shares should be done away with in the interest of the people.

“We support the Standing Committee's decision on making the shares inheritable. What the Committee needs to fix is how many shares of the company will go to the local community and then develop a formula based on which these will be allotted on land-lost basis,” says Chandra Bhushan.

An important debate is on the definition of the term 'consultation' used in the Bill. While the ministry of panchayati raj had proposed that consultation with gram sabha be defined as ‘consent’, the Committee has recommended that the term ‘consultation’ be read as ‘effective consultation’. It has added that the views of the gram sabha should not be taken lightly or ignored without a “strong valid reason”.

CSE supports the panchayati raj ministry’s view on this: “It is imperative that people whose lands are taken away for mining or those whose livelihoods are lost have a say in the decision making process. This is what is needed to make them a stakeholder in the scenario and not an affected party,” says Narain.

The Committee has also suggested changes/clarifications to minimum/maximum lease area under different category minerals, definition of cooperative, period of mine lease, cancellation of a lease procedure, rate of royalty on coal produced in different states, etc.

“The only thing missing in the Committee's recommendations is elaborating how the money collected through profit sharing provision has to be spent. This money should be used to reduce present impoverishment and for future well being of the communities by investing in health and education,” says Chandra Bhushan.

For more on this or to talk to an expert, please contact Souparno Banerjee of the CSE Media Resource Centre (souparno@cseindia.org / 9910864339).